Athabasca Oil Sands has reported a very significant oil discovery in the Nordegg formation. Anglo Canadian Oil Corp (ACG.V) has the largest land positions in the Nordegg with a 51 -101 best resource estimate of 6.4 billion barrels of oil. With drilling starting in the next couple of weeks, over $11 million dollars in the bank and the share price at record lows, it might be a great time to add ACG.V to your portfolio.
GLTA
Stockrus
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Athabasca Oil Sands Corp (C-ATH) - News Release
Athabasca Oil omits P&L from Q2 results NR
2011-08-04 07:14 ET - News Release
Shares issued 401,081,272
ATH Close 2011-08-03 C$ 15.63
Mr. Sveinung Svarte reports
ATHABASCA OIL SANDS CORP. REPORTS 2011 SECOND QUARTER FINANCIAL RESULTS AND PROVIDES OPERATIONAL UPDATE
Athabasca Oil Sands Corp. has filed its financial statements and management's discussion and analysis (MD&A) for the three- and six-month periods ended June 30, 2011. These documents can be retrieved electronically from AOSC's website and later this morning from SEDAR.
Athabasca operational update
Oil sands activities
The company advises that its wholly owned oil sands development projects at Hangingstone and Dover West, as well as its joint venture projects at MacKay River and Dover, are progressing as planned. Athabasca remains on target to file its Dover West clastics and carbonates project and pilot applications prior to year-end. The company's thermal-assisted gravity drainage (TAGD) test at Dover West has generated positive early results, and AOSC expects to test bitumen production in late 2011 or early 2012. Athabasca continues to evaluate a number of oil sands business development opportunities.
Deep basin activities
Athabasca is pleased to announce it has drilled and completed three wells using multistage fracture technology, all located in the Deep basin area of northwestern Alberta. Two drilling rigs are currently operating, and a third is scheduled to arrive in late September.
Athabasca initiated its horizontal well evaluation drilling program in first quarter 2011, in the southern portion of its Deep basin lands, near Fox Creek, Alta.
Athabasca has acquired in excess of one million acres of land in the Deep basin based on light oil and liquids-rich natural gas resource play potential in the Duvernay, Montney and Nordegg formations. Sveinung Svarte, Athabasca's president and chief executive officer, says: "We are excited to have accumulated a substantial acreage position in the heart of the fairway where industry is demonstrating significant success, particularly in the Duvernay and Montney formations. In addition, several other geological formations that are promising for light oil and liquids-rich natural gas, such as the Nordegg, have been identified within the lands, adding to the multizone hydrocarbon potential in the area."
Evaluation drilling program
Initial well locations and target formations were influenced by logistical considerations to allow for operations during spring break up. Easily accessible locations for Nordegg and Montney formations were chosen for the first three wells. The first well in the Kaybob area is located approximately nine kilometres northwest of Fox Creek and was drilled within the Nordegg formation, which is a rich source rock believed to yield medium to heavy gravity oil in the range of 17-degree-to-26-degree API. Athabasca generally targets areas where the Nordegg formation has reached high thermal maturity, increasing the possibility of yielding lighter oil.
Initially, this strategy seems successful with the production of 41-degree API oil from the 13-14-063-20W5M well, located just off Highway 43 in the Kaybob area. The well was drilled at a lateral length of 1,200 metres, equipped with an open hole (ball-drop) liner system, and then was completed with a 15-stage slick-water fracture treatment. The well flow tested for five days, with final restricted flow rates of approximately 500 barrels of oil equivalent/day (boepd) -- 400 barrels of oil/day (bopd) and 700,000 cubic feet per day of natural gas. The well flowed with an oil cut of 65 per cent to 75 per cent (25-per-cent-to-35-per-cent stimulation fluid) at approximately 290-pound-per-square-inch flowing tubing pressure.
"Athabasca purposely limited the initial flowback rate from the shale following the fracture treatment because we believe this will both help prevent movement and embedment of the proppant in the near-well-bore region and help prevent closure of the fracture network," Mr. Svarte reports. "The well is currently suspended having reached its maximum permitted flare volumes. We believe that the results from this well, which demonstrate that the Nordegg formation is capable in certain favourable locations of yielding high API oil and with high production rates, if repeatable, could become a game changer for the Nordegg formation exploitation."
Given that the Montney section in this area is also highly prospective and immediately underlies the Nordegg formation, a second well was drilled from this pad site into the Montney formation with the goal of proving productivity from both zones.
The Montney horizontal well was drilled in parallel to the Nordegg well bore, with a lateral offset of approximately 170 metres. The horizontal section was 1,196 metres in length, equipped with a similar liner system to the Nordegg well, and was completed with a 15-stage gelled water fracture treatment. The well was flow tested for six days, with final flow rates of approximately 250 boepd (75 bopd and 1.1 million cubic feet per day) at a flowing tubing pressure of 175 pounds per square inch. The oil cut was 25 per cent and continuing to rise throughout the flow test, with only 30 per cent of the stimulation fluids recovered to date.
"Although not surprised based on results from offsetting wells drilled by other operators, Athabasca is very encouraged by these Montney results, especially considering the non-optimal fracture treatment which took a total of five days due to a combination of equipment failure and inclement weather," adds Mr. Svarte.
The density of the oil from the Montney zone was measured at 37-degree API, and also showed a total mass fraction of sulphur approximately 30 per cent higher than that measured in the Nordegg well. Interference testing was conducted during the flow period between the wells with downhole recorders, followed by an extended buildup on both formations. From these data, the company has evidence that these two well bores are producing from separate reservoirs.
Athabasca has constructed a multiwell battery and short gas pipeline for these two wells, and hopes to bring them both on production within the next one to two weeks.
Athabasca's Waskahigan 3-22-62-23W5M well also targeted the Nordegg formation. The lateral section was 1,228 metres in length, equipped with a similar openhole liner system to the other wells, and was completed with a 15-stage slick-water fracture treatment in late March, 2011. The 30-day initial production rate for the well was 78 bopd, with rates restricted to maintain a bottomhole pressure above 1,100 pounds per square inch. After almost three months of production, the well is still pumping at 35 to 40 bopd with 70-per-cent oil cut and has a total of 14,325 barrels of stimulation fluid left to recover. The most significant production characteristic from this well is the quality of the crude oil -- approximately 32-degree API.
Mr. Svarte notes: "Again, this demonstrates that the Nordegg formation can yield lighter oil. Continued discovery of high gravity oil and high production rates from the Nordegg could significantly change the way industry views its potential."
Athabasca is currently drilling four wells on two well pads in the Placid and Simonette areas targeting the Nordegg and Montney formations. The company anticipates having completion results on all four wells by early September.
Development
The company is preparing a holding application covering approximately 20 sections of land in the Kaybob area. Athabasca anticipates that this will be its first commercial development in the Deep basin, with field development activities commencing in 2012. This anticipated development is based on the early drilling success at Kaybob, Athabasca's large land position in the Duvernay, Montney and Nordegg formations, and the easy access from Highway 43.
2011 budget
Based on the successful results from the first three wells, a budget increase of $61.5-million was approved in June to increase the 2011 well count from six wells to 14 wells. The 2011 capital budget for the Deep basin work program is currently set at $97.7-million. Athabasca will continue to evaluate expanding this program, including its own Duvernay evaluation drilling program, in the latter half of this year.
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